Melbourne house prices continue to fall

May 20, 2012 admin Australian Economy, Australian Housing 20

ABC News featured this story on Melbourne’s oversupply of homes this week, reporting on expectations the market will only get worse. Residex estimates there is an oversupply of 14,000 homes and expect prices to fall a further five to ten percent over the next year.

Residex CEO John Edwards said “There is far too much stock coming onto the market right now and far too much stock to be delivered into that market given the housing supply situation exists” while Macrobusiness’s Leith van Onselen indicates “New home sales are currently tracking at decade lows despite generous subsidies from the Victorian State Government which are due to expire very soon.”

How times have changed. It wasn’t that long ago, lobbyists were screaming a shortage of homes, one that would keep a floor under prices.

ABC reporter, Neal Woolrich, closes the story with the summary, “Most agree that this month’s 50 basis point interest rate cut will help at the margins, but the underlying problem remains: too much housing and not enough buyers willing to take the plunge in these uncertain times.”

It is a shame the story falls short of mentioning excessive household debt as the real underlying problem.

» House prices continue to fall – ABC The Business, 18th May 2012.




20 Comments

  1. Wait until all those appartments that clutter Melbourne’s skyline come onto the market. That’s assuming that the companies building them don’t do a ‘St.Hiliers’ and go bust before they are finished.
    Reckon in 2 years time they will be giving them away.

  2. My apologies for posting off topic, but it appears Adelaide Real Estate is also in the doldrums. Once more, we have an article in The Advertiser with Real Estate Agents posing as home buyers. Paul Keldoulis whilst might be a `house hunter` as declared in the article, happens to be from the picture on the Brock Harcourts link, a Real Estate Agent with that company. It is also the same company that Greg Moulton (now Real Estate Institute President of SA ) was working for before his current position. This is the second time Brock Harcourts have done this, the last with a RE Agent posing as a FHB. Links below:

    http://www.adelaidenow.com.au/real-estate/news/its-double-trouble-for-home-sales/story-e6frefgc-1226361226724

    http://www.brockharcourts.com.au/People/19345/Paul-Keldoulis

  4. Lets recap what Bert Dennis just said:
    – They are reducing lot sizes and house sizes (assuming that the demand is still there)
    – Streamlining the business (whatever that means)
    – Calls for the government (State?) to recognise the importance of housing to the economy (Yeah, just like Ireland!)
    – Calls for a change in the “anti-development” mindset of public servants (how do you force that?)
    – Claims the banks are making it harder for people to borrow (no, they are managing risk after the horse has bolted)
    – States that contract cancellations are running at 25%, up from 20%, (that still seems awfully high as a base line)

    I think John Edwards put it remarkably well to say that Melbourne needs a “raison d’etre”. Without the traditional manufacturing base all you have is a local population engaged in domestic building construction and retail consumption of shiny things made elsewhere. Coveting of property is our ONLY raison d’etre.

    We have an entire tax and banking system tilted toward supporting that aim.

  6. At the end of the day people are waking up and are realising property has reached unsustainable pricing levels, which also means unsustainable debt levels. Young couples living in mansions in poverty – Very Sad!
    Sydney is next on the list as the property market has not yet been hit.
    Unfortunately it has too get much worse before it gets better.

  7. The weather in Melbourne is the major reason the prices are falling ! Who would live there ?
    Canberra is popping now and I hope all the lawyers (politicians) have heaps of negative geared properties to work for. Enjoy the negative cash flow and servicing the debt suckers !!!!

  8. Prices still have a very long way to fall before they are remotely affordable. Lets pray the price fall continues to happen and happens fast so that people can get on with their lives. I’m sure there is a lot of people out there who feel imprisoned by this housing boom. This slow melt is frustrating.

  11. Good find Arthur. According to Wakelin Property’s research a cool $22 billion has been provided in FHOGs since 2000. And what do we have to show for it? One big bubble.

  12. It would be worth digging to see if Monique Wakelin had previously been a strong proponent of the grant and other property largesse in general. It seems an odd angle to take for a real estate vested interest and made a strange weekend when you read Romsey’s article from the Age. I note from that another RE industry participant questioning the dodgy stats being released by agents and banks in general. Nothing we weren’t aware of but it’s nice to see the industry credibility being challenged by those on the inside.

  15. It will be interesting to see the effect (if any) of the arrival of the “much feared” Carbon Tax. Seems to be a case of very well hyped public negativity, and with the $AU now below $US parity, then these factors may all add to the decline of the “wealth effect”, and the overall willingness to commit to long term, high cost investments (including PPOR investments).

    We’ve been following the cost of Qld small acreage farms (typical 10 – 100 acre Hobby farms) on and off over the past 2 years, and the trend has been significantly, and consistently, downwards. Yet – nothing seems to be selling (same properties, same photos, two years on), and the properties are generally in excellent condition with guaranteed uninterrupted views – after all it’s YOUR land, not some developer’s next big thing.

    At least farms have land value: All apartments seem to have is strata cost and obviously no land asset value to speak of. Just compare what $400,000 buys you now on Farmbuy.com, vs what you pay for a concrete box with no views on Domain.com.

  16. The race for the greater fool is on! The withdrawl of the “boost” will only suck future demand into the present and pit buyer against buyer in a fevered rush to enter debt servitude. Then, later, the gaping chasm between pre and post boost prices will widen as inevetibly prices trend lower and stock on market trends higher.

    But of course Andrew Wilson says “Expect the trend (price rises!) to continue”.

    http://www.theage.com.au/business/property/victorian-first-home-buyers-drive-up-sales-20120529-1zg7g.html

  17. Off topic I know but property auctions seem to have become a spectator event. Had a visit from an estate agent, calling door to door, wondering if we would like to attend a house auction to be held in two days close to our house. Thats one way of keeping up attendances I suppose. You never know it might catch on as a spectator sport!

  18. Calico , I have them (realestate agents) ringing me every week.
    No sales means, no wages. The great confidence game is up and they will fight to the bitter end.

  20. Let’s just sell all our land, jobs, and houses, to Asian countries! Our government has failed it’s people and now we will all pay the price for their greed. I dont see the point in pushing for population growth when you have no jobs to support it. We do live in the greatest country in the world it’s just a shame we can not manage it properly, so we sell it off. We all have to take responability for our own actions i.e. Debt if you can’t afford it dont buy it!

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